Construction industry to see 12-16% contraction in investment: CRISIL

New Delhi: The construction industry is likely to be knocked down hard by the corona pandemic and the extended lockdown as a contraction of 12-16 percent in construction investments is expected in the current financial year to Rs 7.3 lakh crore from Rs. 8.6 lakh crore in financial year 2019-20, according to a report by ratings agency CRISIL.

The are several external risks like the lower global demand, supply disruptions and also internal financial problems. There are many other issues like factory shutdowns and far more delayed capital expenditure by the companies in India.

With construction stalling at various places, the construction players are expected to have 13-17 percent lower revenues in the current financial year.

The EBIDTA of the construction companies is likely to drop about 200-300 basis points and reach the levels of 4-6 percent in the current financial year from the 7-9 percent seen in financial year 2019-20. 

The investment in the construction field by the central and state governments is likely to drop as the governments will divert the monies from infrastructure and construction activities to healthcare in the wake of the current virus pandemic. The budgetary allocation by the central government to the infra sector for the current fiscal is already lower as compared to 2019-20 fiscal.